NGL provides Adjusted EBITDA guidance that does not include certain charges and costs, which in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, such as income taxes, interest and other non-operating items, depreciation and amortization, net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities and items that are unusual in nature or infrequently occurring. The exclusion of these charges and costs in future periods will have a significant impact on the Partnership’s Adjusted EBITDA, and the Partnership is not able to provide a reconciliation of its Adjusted EBITDA guidance to net income (loss) without unreasonable efforts due to the uncertainty and variability of the nature and amount of these future charges and costs and the Partnership believes that such reconciliation, if possible, would imply a degree of precision that would be potentially confusing or misleading to investors.
About NGL Energy Partners LP
NGL Energy Partners LP, a Delaware limited partnership, is a diversified midstream energy company that transports, stores, markets and provides other logistics services for crude oil, natural gas liquids and other products and transports, treats and disposes of produced water generated as part of the oil and natural gas production process.
For further information, visit the Partnership’s website at www.nglenergypartners.com.
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in Thousands, except unit amounts)
September 30, 2020
March 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
16,912
$
22,704
Accounts receivable-trade, net of allowance for expected credit losses of $3,399 and $4,540, respectively
439,889
566,834
Accounts receivable-affiliates
14,904
12,934
Inventories
182,859
69,634
Prepaid expenses and other current assets
74,150
101,981
Total current assets
728,714
774,087
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $619,820 and $529,068, respectively
2,799,725
2,851,555
GOODWILL
982,239
993,587
INTANGIBLE ASSETS, net of accumulated amortization of $706,259 and $631,449, respectively
1,538,417
1,612,480
INVESTMENTS IN UNCONSOLIDATED ENTITIES
21,215
23,182
OPERATING LEASE RIGHT-OF-USE ASSETS
168,349
180,708
OTHER NONCURRENT ASSETS
47,752
63,137
Total assets
$
6,286,411
$
6,498,736
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable-trade
$
379,420
$
515,049
Accounts payable-affiliates
23,985
17,717
Accrued expenses and other payables
138,572
232,062
Advance payments received from customers
24,143
19,536
Current maturities of long-term debt
13,123
4,683
Operating lease obligations
50,709
56,776
Total current liabilities
629,952
845,823
LONG-TERM DEBT, net of debt issuance costs of $22,267 and $19,795, respectively, and current maturities
3,275,166
3,144,848
OPERATING LEASE OBLIGATIONS
114,833
121,013
OTHER NONCURRENT LIABILITIES
105,835
114,079
CLASS D 9.00% PREFERRED UNITS, 600,000 and 600,000 preferred units issued and outstanding, respectively
551,097
537,283
EQUITY:
General partner, representing a 0.1% interest, 128,901 and 128,901 notional units, respectively
(51,518
)
(51,390
)
Limited partners, representing a 99.9% interest, 128,771,715 and 128,771,715 common units issued and outstanding, respectively
1,242,676
1,366,152
Class B preferred limited partners, 12,585,642 and 12,585,642 preferred units issued and outstanding, respectively
305,468
305,468
Class C preferred limited partners, 1,800,000 and 1,800,000 preferred units issued and outstanding, respectively
42,891
42,891
Accumulated other comprehensive loss
(307
)
(385
)
Noncontrolling interests
70,318
72,954
Total equity
1,609,528
1,735,690
Total liabilities and equity
$
6,286,411
$
6,498,736
NGL ENERGY PARTNERS LP AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in Thousands, except unit and per unit amounts)
Three Months Ended September 30,
Six Months Ended September 30,
2020
2019
2020
2019
REVENUES:
Crude Oil Logistics
$
466,841
$
641,152
$
742,880
$
1,357,312
Water Solutions
88,678
101,249
176,743
173,032
Liquids and Refined Products
612,324
1,061,671
1,092,322
2,145,364
Other
315
264
628
519
Total Revenues
1,168,158
1,804,336
2,012,573
3,676,227
COST OF SALES:
Crude Oil Logistics
386,771
569,699
604,328
1,218,939
Water Solutions
579
(6,496
)
5,279
(9,303
)
Liquids and Refined Products
577,086
1,025,565
1,031,422
2,068,597
Other
454
435
908
900
Total Cost of Sales
964,890
1,589,203
1,641,937
3,279,133
OPERATING COSTS AND EXPENSES:
Operating
56,054
74,886
121,041
136,198
General and administrative
17,475
43,908
34,633
64,250
Depreciation and amortization
87,469
63,113
171,455
116,867
Loss on disposal or impairment of assets, net
5,954
3,111
17,976
2,144
Operating Income
36,316
30,115
25,531
77,635
OTHER INCOME (EXPENSE):
Equity in earnings (loss) of unconsolidated entities
501
(265
)
790
(257
)
Interest expense
(46,935
)
(45,017
)
(90,896
)
(84,894
)
Gain on early extinguishment of liabilities, net
13,747
—
33,102
—
Other income, net
1,585
183
2,620
1,193
Income (Loss) From Continuing Operations Before Income Taxes
5,214
(14,984
)
(28,853
)
(6,323
)
INCOME TAX BENEFIT (EXPENSE)
774
(640
)
1,075
(319
)
Income (Loss) From Continuing Operations
5,988
(15,624
)
(27,778
)
(6,642
)
Loss From Discontinued Operations, net of Tax
(153
)
(185,742
)
(1,639
)
(186,685
)
Net Income (Loss)
5,835
(201,366
)
(29,417
)
(193,327
)
LESS: NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(168
)
129
(219
)
397
NET INCOME (LOSS) ATTRIBUTABLE TO NGL ENERGY PARTNERS LP
$
5,667
$
(201,237
)
$
(29,636
)
$
(192,930
)
NET LOSS FROM CONTINUING OPERATIONS ALLOCATED TO COMMON UNITHOLDERS
$
(17,933
)
$
(32,561
)
$
(73,748
)
$
(152,687
)
NET LOSS FROM DISCONTINUED OPERATIONS ALLOCATED TO COMMON UNITHOLDERS
$
(152
)
$
(185,556
)
$
(1,637
)
$
(186,498
)
NET LOSS ALLOCATED TO COMMON UNITHOLDERS
$
(18,085
)
$
(218,117
)
$
(75,385
)
$
(339,185
)
BASIC LOSS PER COMMON UNIT
Loss From Continuing Operations
$
(0.14
)
$
(0.26
)
$
(0.57
)
$
(1.21
)
Loss From Discontinued Operations, net of Tax
$
—
$
(1.46
)
$
(0.01
)
$
(1.47
)
Net Loss
$
(0.14
)
$
(1.72
)
$
(0.58
)
$
(2.68
)
DILUTED LOSS PER COMMON UNIT
Loss From Continuing Operations
$
(0.14
)
$
(0.26
)
$
(0.57
)
$
(1.21
)
Loss From Discontinued Operations, net of Tax
$
—
$
(1.46
)
$
(0.01
)
$
(1.47
)
Net Loss
$
(0.14
)
$
(1.72
)
$
(0.58
)
$
(2.68
)
BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
128,771,715
126,979,034
128,771,715
126,435,870
DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
128,771,715
126,979,034
128,771,715
126,435,870
EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION
(Unaudited)
The following table reconciles NGL’s net income (loss) to NGL’s EBITDA, Adjusted EBITDA and Distributable Cash Flow:
Three Months Ended September 30,
Six Months Ended September 30,
2020
2019
2020
2019
(in thousands)
Net income (loss)
$
5,835
$
(201,366
)
$
(29,417
)
$
(193,327
)
Less: Net (income) loss attributable to noncontrolling interests
(168
)
129
(219
)
397
Net income (loss) attributable to NGL Energy Partners LP
5,667
(201,237
)
(29,636
)
(192,930
)
Interest expense
46,840
45,113
90,906
85,023
Income tax (benefit) expense
(827
)
650
(1,128
)
339
Depreciation and amortization
86,822
63,266
170,024
118,110
EBITDA
138,502
(92,208
)
230,166
10,542
Net unrealized losses (gains) on derivatives
4,457
(5,462
)
31,128
(8,936
)
Inventory valuation adjustment (1)
(1,641
)
(5,439
)
2,179
(25,185
)
Lower of cost or net realizable value adjustments
(1,531
)
(901
)
(33,534
)
(1,819
)
Loss on disposal or impairment of assets, net
6,063
177,561
19,147
176,594
Gain on early extinguishment of liabilities, net
(13,747
)
—
(33,102
)
—
Equity-based compensation expense (2)
2,256
21,295
4,558
24,996
Acquisition expense (3)
169
5,085
326
7,176
Other (4)
3,253
3,332
7,601
6,655
Adjusted EBITDA
$
137,781
$
103,263
$
228,469
$
190,023
Adjusted EBITDA – Discontinued Operations (5)
$
(190
)
$
(20,203
)
$
(484
)
$
(37,161
)
Adjusted EBITDA – Continuing Operations
$
137,971
$
123,466
$
228,953
$
227,184
Less: Cash interest expense (6)
43,568
42,712
83,967
80,487
Less: Income tax (benefit) expense
(774
)
640
(1,075
)
319
Less: Maintenance capital expenditures
6,830
16,461
15,998
33,390
Less: Preferred unit distributions paid
15,108
5,796
30,138
18,872
Less: Other (7)
—
127
—
127
Distributable Cash Flow – Continuing Operations
$
73,239
$
57,730
$
99,925
$
93,989
(1)
Amount reflects the difference between the market value of the inventory at the balance sheet date and its cost, adjusted for the impact of seasonal market movements related to our base inventory and the related hedge position. See “Non-GAAP Financial Measures” section above for a further discussion.
(2)
Equity-based compensation expense in the table above may differ from equity-based compensation expense reported in the footnotes to our unaudited condensed consolidated financial statements included in the Partnership’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. Amounts reported in the table above include expense accruals for bonuses expected to be paid in common units, whereas the amounts reported in the footnotes to our unaudited condensed consolidated financial statements only include expenses associated with equity-based awards that have been formally granted.
(3)
Amounts represent expenses we incurred related to legal and advisory costs associated with acquisitions, including Mesquite during the three months and six months ended September 30, 2019.
(4)
Amounts for the three months and six months ended September 30, 2020 and 2019 represent non-cash operating expenses related to our Grand Mesa Pipeline, unrealized losses on marketable securities and accretion expense for asset retirement obligations.
(5)
Amounts include the operations of TPSL, Gas Blending and Mid-Con.
(6)
Amounts represent interest expense payable in cash for the period presented, excluding changes in the accrued interest balance.
(7)
Amounts represents cash paid to settle asset retirement obligations.